Friday, July 30th, 2010

The public library conversation about ebooks is also heating up. Unfortunately, much of the conversation ignores a critical factor that makes ebook lending problemmatic. That factor is not luddism, but the simple fact that, for libraries, ebook economics doesn’t make sense.*

The $0.50 Circ. I’ve written on this topic in the past. My contribution today was for me to spend some time trying to figure out what it costs to take out a paper book from a public library. What, in other words, is the cost per circulation?

The data is pretty sparse, but it does include two critical data points: Total Collection Expenditures and Total Circulation. From these you can derive a third statistic, Cost per circulation.

For example, if the South Portland Public Library spends $78,038 per year on materials, and those materials are taken out 249,431 times, we can see deduce that the cost per circulation was $0.31.

All told, I surveyed 25 libraries, running down town names—eg., Portland, ME ($0.54), Portland, OR ($0.29), Portland, CT ($0.51), Portland, IN ($0.31)—as well as including a few big systems—eg., Dallas, TX ($0.48), Charlotte Mecklenberg ($0.50). You can see my spreadsheet here.

The average of all comes out at $0.50. I don’t think a much larger survey would change that by more than a dime in either direction.** (If you want to run the full numbers, and have a copy of Microsoft Access, ILMS has the data files.)

Unfortunately, this doesn’t get us all the way to a book circulation number. But it gets us close. Print circulation still makes up the majority of circulation transactions. And books are not the most expensive materials libraries circulate. So whatever the number, it’s near $0.50.

Come and get your half-buck! Cost-per-circulation is a critical number because it shows how much libraries are spending to satisfy their patron’s reading needs–ignoring staff, building, etc. If the switch to ebooks causes that number to rise, we can expect library budgets to rise as well. If it rises a lot, library budgets will rise a lot.

Unfortunately, to keep library budgets the same, ebook sellers will need to accept $0.50 for each library loan. That’s not just the publisher’s money. The same $0.50 must compensate the publisher, the author and the ebook seller—all of whose costs were figured into the previous $0.50 calculations. (You can perhaps begin to understand why publishers and authors have never liked libraries, although few will say it openly.)

This princely $0.50 is compared to what ebooks go for, on average, in the consumer market. Of course nobody knows the answer there, but Amazon has tried to get everyone to adopt a $9.99 price point for popular titles and the average must be on this order. So, in order to keep library budgets in line, ebook sellers will have to be willing to accept 1/20 of the revenue they could get from the consumer market.*** Even assuming some library buyers buy less than they would have loaned, that’s a daunting ratio.

The magic is over. Will ebook sellers accept the $0.50 deal? Of course not. To think optimistically in the face of such numbers is to avoid the problem. Publishers, authors and ebook sellers aren’t stupid.****

Libraries at least are smart. Libraries are so great because aggregated lending is a wonderfully efficient thing, wringing high value from low cost. By buying books for the whole community, and making them generally available, libraries managed to reduced the cost of reading to a paltry half-dollar, far less than a paper book ever cost. That was a magical time.

With ebooks, that time may be over.

Reply to “How is this in anyway different from the case with pbooks? Hardbacks normally retail well over $9.99, yet library shelves are filled with them. Somehow the publishers manage to survive with this.”

The difference is that publishers have never been able to stop lending–by libraries or anyone else. Like reselling, giving and inheriting, lending is a basic right we have so long as its not taken away. The only way to take it away is through a law (as applies to software rental) or a contract. Publishers actually did try posting notices inside books, preventing resale (see Bobbs-Merrill Co. v. Straus), but it was stopped. A real contract requires both sides to explicitly agree, and notices like that were ruled not to constitute a contract. In theory, bookstores could start requiring real contractings, only selling you a book on the condition you didn’t sell or lend it to someone else. Obviously, this would outrage people, so it’s never been tried.

eBooks make theory a reality. All the ebook licenses constrain gifting, reselling and lending, and most prohibit it entirely. The media change has largely obscured the shift. People know they can’t lend software, and indeed it makes a certain amount of sense. Digital goods are so frictionless an unlimited ability to lend, even constrained by a one-at-a-time rule, would quickly give rise to a massive lending clearinghouse, and a publisher would only sell as many copies of a book as were being read simultaneously at its peak.

As far as surviving, my post made no claims whatsoever about surviving. Publishing has always known that lending and resale cut into revenue, just as people who make snow blowers know that, if nobody could lend or sell a snowblower, more people would buy them. In the world of physical sale, lending and reselling are normal and, ultimately, built into the prices we pay. Just as snowblower manufacturers don’t go under even though my wife and I exclusively borrow our neighbors’, Publishers don’t either.

* This post only deals with public libraries. The issues are different for an academic library. Academic publishers have a much smaller “consumer” market, and academic libraries have much high cost-per-circulation. I suspect that academic libraries will transition to ebooks more easily.

** Obviously, real circulation involves books bought in previous years, but assuming neither number swings wildly around, you can estimate the cost per circulation very well from the collection expenditures and total circulation.

*** The only escape is in the notion that libraries don’t canibalize consumer sales. There’s certainly some effect there. If everyone had to buy their books, some people wouldn’t buy as many books as they used to take out for free at the library. But is this effect sufficient to overturn a 20-to-1 pricing disparity?

**** We have, of course, completely ignored the cost of the devices themselves. If libraries also lend the devices, their costs will go up still further.

The conventional rejoinder here, after calling me a luddite, is to argue that publishers are already willing to let Overdrive lend out some ebook titles in libraries. I contend that they were willing to experiment with it, especially considering how limited Overdrive is as a platform, and that in any case, when you add up all the fixed and variable costs, and divide by actual usage, Overdrive is actually quite expensive. It’s also worth noting that a recent COSLA report on ebooks noticed Overdrive is now refusing larger agreements, speculating:

“OverDrive won’t sell to the LYRASIS consortium and has begun to balk at statewide purchasing groups. Maybe this is for the comfort of nervous publishers who view ebooks as frictionless, ripe for piracy, or long-term profit losses as library products”

Monday, July 12th, 2010

LibraryThing for Libraries now supports scoping by location. For many consortia, especially those that share books and ILL, LTFL in its current incarnation was fine. Other consortia wanted LTFL to support scoping—they wanted patrons searching within a scoped location to only see, for example, LTFL recommending books that are held at that location. Well, now we can do that!

New LTFL customers get this option automatically, and if you already have an existing subscription to LTFL for your consortial catalog, we can switch you over to the new system. Send any questions my way! abby@librarything.com

Tuesday, June 22nd, 2010

Want a free pass? It’s to the exhibit hall only (you have to shell out if you want to get into the meetings and sessions). Follow this link to register to your free exhibit pass. And hey, if you get in free because of us, we expect you to stop by and say hello!

We’ve got lots to show off—our OPAC enhancements (tags, reviews, recommendations, related editions, shelf browse) as well as our new mobile product, Library Anywhere. More on what’s new later this week.

Tuesday, May 25th, 2010

In light of a plan to create a “portable,” “branch-a-day library” in Portland, Maine–LibraryThing’s home–I’ve been thinking about the various possible sorts of “libraries outside of libraries.”

I am of two minds about such projects. I like to see interesting experiments, but dislike replacing valuable services. It doesn’t help that one of the two branches Portland is closing is in my neighborhood. As a branch, it wasn’t the best, but it would take quite a “portable library” to make up for it even so.

Nevertheless, I came up with a list of five types libraries outside of libraries (exluding what might be done with ebooks). Are there any I’m missing?

1. The Bookmobile.

2. The Short-Lived Library. Set up a branch library that lives for a defined period of time, like Boston’s Storefront Library. It’s like an “event store,” but a library. The Storefront Library was a big community success.

3. “Branch-for-a-day.” Find a bunch of spaces–empty storefronts, community center rooms or whatever–and roll full book carts into them on a schedule–Monday this neighborhood, Tuesday that neighborhood, etc. Has this ever been tried?

4. The Cafe Shelf. Set up mini-branches consisting of shelves–general or themed–in public commercial spaces, like coffee shops. The books would be owned but probably non-collection items. Care would be taken to tie all the books back to the main collection, with paper inserts or whatever.

5. The Vending-Machine Library. Like Conta Costa’s Library-a-Go-Go, a cross between Redbox and your library. It’s like a library, but with no pesky salaries and a terrible selection.

Wednesday, May 5th, 2010

The UK publication “Library and Information Gazette” just ran a great article in their April 22nd issue about LTFL. Written by one of our friends at Bowker, it covers LibraryThing for Libraries in general, as well as our new products, Shelf Browse and Library Anywhere (a mobile catalog for any library).

Shelf Browse, as well as other LTFL enhancements like tags, reviews, recommendations, is available now. We’re currently beta testing Library Anywhere with over 100 libraries, and it should be available to buy for your library this summer.

You can read the article online here (on page 4). Or read a PDF of it here.

Friday, April 23rd, 2010

Techcrunch just reported an interesting development with Barnes and Noble’s Nook eReader, a feature called “Read in Store.”

The idea is simple. If you’ve got a Nook and you’re in a physical Barnes and Noble store, you can read any ebook they carry. When you leave the store, the book goes away. As TechCrunch writes, “It’s the Brigadoon of ebook reading.” (allusion explanation)

There are limitations, of course. Just as the Nook’s “lending” feature only works once per book, and then never again, Read in Store is only good for an hour of book reading per day, plus another 20 minutes for magazine and newspaper content.

Retail sense. It certainly makes retail sense. There was always something risky about the Nook. Was Barnes and Noble preparing for a future without stores or just speeding its own demise? Many ereader owners give up on physical bookstores.(1) Read in Store is designed to keep them there. As the press release puts it, “Our digital customers will feel at home in our stores” where they can read books on their Nook while “enjoying their favorite beverage in our café.”(2)

Best of all, this is territory Amazon and Apple can’t follow. Amazon has no stores, and will never add them. (As Indie Booksellers never tire of pointing out, Amazon’s success depends in part upon avoiding sales tax, which requires having no physical presence in a state.) Amazon has stores, but they’re not exactly set up for reading.

If I were Apple, I’d be talking to Borders right now. If I were Apple, there was no disease, and animals didn’t eat each other, I’d be talking to independent booksellers. Maybe it’s time indies got together, presumably through IndieBound, and tried to wring a similar deal with someone–Kobo, Sony, or the congruently social Copia.

An answer for libraries? What works for Barnes and Noble could also work for libraries. Indeed, since every Barnes and Noble has suddenly turned into a limitless library, real libraries risk losing a core value to a mere bookstore.

Fortunately, the change to a “Brigadoon Library” would be gentle. Libraries are already accustomed to in-library database access. This would be an extension of an established concept–very helpful in selling new ideas to institutions that are too often hostile to them. And it should be easy to set up–just submit your wifi’s IP address to an ereader’s website and you’re good to go.

Best of all, this is a library solution that makes sense to publishers and could therefore actually happen.(4) Publishers signed on with Barnes and Noble because they calculated that the sales they lost from free reading would be more than offset by the sales they gained from people who bought the book after tiring of the physical limitation–and by the extra word of mouth.(5) With libraries, the publisher incentive is less, but still significant. Readers cannot turn from an ereader to buy a physical copy, as they could at a Barnes and Noble store. But, as at a store, they can buy the ebook. There’s no reason publishers wouldn’t provide such a service for free, or, more probably, a low cost.(6)

What about outside the library? Will many in libraryland object to “read in the library for free but pay to take it home”? Certainly. But here’s where ebook rental comes in. The library will pay to have some books available for take-home rental.

As I’ve pointed out in the past, ebook rental is a serious down-elevator for libraries. Through the magic of the First Sale doctrine, libraries could extract a lot more value from paper books than “regular” buyers–something like nine times as much. This surplus value was to a large degree why libraries came about, and why they continue to make economic sense. But now that publishers aren’t bound by First Sale, they have no incentive whatsoever to allow libraries similarly generous terms. Libraries will have to pay full price for the value they deliver. Once that happens libraries will have little advantage over renting the book yourself.(7) Libraries become a “simple” book subsidy, not a magical one.

I don’t see this regime ending. Publishers will never allow libraries to circulate digital books under the older, physical terms. They will charge for it, and charge what it’s worth.(8) But in-library reading can augment necessarily restricted and circumscribed ebook lending. Thus, the library itself–the physical library–can serve as a limitless portal to the world. And, in addition, the library can allow paper books, and some digital books to be taken out.

Library dystopia. The Brigadoon Library holds out some hope that libraries can avoid “library dystopia”–a world in which the loss of First-Sale value and the virtualization of everything undermines public support for the library, and for the other enduring values libraries deliver. It’s a world without libraries, or a world with libraries that provide much less.

For me, these enduring values include helping patrons find and understand information, and providing a vibrant community space. Many would also include the provision of free computers, but I see this as a downward race against technology prices–a service that will disappear as the need disappears, much like the telephone service libraries in rural areas once provided.(9)

Instead of a library depleted of books–not to mention CDs and DVDs(10)–and of library patrons not there for babysitting or free computers, the Brigadoon Library would be a full library. It would be full of patrons browsing the entire world of books.

Library utopia? This isn’t library utopia. The Brigadoon Library would be a sort of updated closed-stacks library, and closed stacks library are limited libraries. It isn’t the universal library, the expected future library where everything is available everywhere–and for free.

I didn’t get a shot of the reading room, but here’s my son, with the lions. No libraries, no lions. For God’s sake, think of the children!

But it’s a healthy one. It’s healthy for authors and publishers. It’s healthy for library budgets. And it’s healthy for patrons.

I got a sense of how healthy a closed-stacks library can be a recent trip to the Boston Public Library’s Research Library–the beautiful old building next to the ugly modern one. The reading room was full of people studying and browsing the web, but a core group was there because the “Research Collections” at the Boston Public Library are only available for use in-library. Kept from going elsewhere, they were truly limited.

But the limits had their benefits. Researchers and non-researchers enjoyed the air conditioning, the gorgeous room, and the company of others. The building and the people added something. And that’s not even mentioning all the restaurants and bookstores nearby, or the library-sponsored readings and music events. The “anywhere library” of solitary individuals in their underwear is not really a better library.

I’ll stop there. My blog posts all way to be essays, and my readers prefer they were Twitter posts.

1. Those that don’t often use them very cynically–soaking up the nice displays and friendly smiles of the booksellers without the least intention to buy. There is, I think, a special circle of hell for people who do this, alongside the people who browse stores in order to figure out what they’re going to buy on Amazon.

2. Does any human being not standing in front of a table with a pad of paper uses the word “beverage”?

3. In some cases, libraries would probably have to pay outright for a read-in-library feature. Few patrons are going to buy an encyclopedia, for example. But the payment would be minimized by the limitation.

4. Here and elsewhere I’m going to use “publisher” to mean whoever sells the book. “Publisher” may eventually mean author directly, or some intermediary with no editorial or curatorial role. I despise phrases like “content provider.”

5. This ignores the likelihood that publishers were also influenced by Barnes and Noble’s outside share of their own book sales.

6. In some cases, libraries would probably have to pay outright for a read-in-library feature. Few patrons are going to buy an encyclopedia, for example. But the payment would be minimized if the item could only be read while in the library.

7. The exception is market power and price discrimination. Libraries buy a lot of books, so they may be able to command moderate discounts. As for price discrimination, it only applies if you need to go to the library to get the book. Price discrimination works by targeting some type of consumer or by imposing some barrier that does the same; for example, paperbacks are price discrimination, big fans and people with money buy the hardback; lesser fans and the cost-conscious wait to buy the paperback.

8. The only real hope is legislation. If Congress passed a bill that forced publishers to sell to libraries at a certain cost, with certain rights, that would change everything. I don’t see that happening, and if it did, the costs and rights would be closer to real value extracted than to the First Sale price.

9. That doesn’t mean libraries will stop providing computers, just as many will still let you make a phone call. Computers may well be necessary for this or that library-related task. And since libraries will probably continue to be used for low-quality babysitting, computers will keep the children entertained. But the provision of free computers and internet cannot remain a core mission of libraries when the “free” part has become superfluous.

10. CDs and DVDs are going virtual much faster than books. And for all the interest in libraries providing ebook rental nobody is talking about libraries providing free music of video streaming. That will never happen.

Sunday, April 11th, 2010

Tim and I are in DC (ok, Arlington, VA) for the Computers in Libraries conference. We’re booth 217 in the exhibit hall, so come by and visit us. (We’re the ones with the rhinos, as always!)

We’re here to show off LibraryThing for Libraries (enhance your OPAC with tags, reviews, shelf browse, recommendations, and more) and our new product, Library Anywhere.

Library Anywhere is a mobile catalog for everyone—it gives you a web version of your OPAC optimized for cell phones, as well as native applications for iPhone, Android and Blackberry. It requires no installation, and is cheap (see the public price list here).

We’re extremely proud and excited about Library Anywhere. We released our beta version to over 100 libraries last week, and response has been great. We’re busy tweaking and building. Stop by the booth and we’ll show you it live.

Friday, April 9th, 2010

I’ve argued before (1, 2) that ebooks will hurt or even kill traditional libraries. I’d like to present the even stronger case that ebooks will kill off the small “community” libraries all around us–the shelves and rooms at churches, health centers and many other similar places.

These little, informal lending libraries grow like weeds all around us and contribute to the fabric of social life and community identity. It will be a shame to lose them, but it is probably inevitable.

Ebooks hurt traditional libraries. In brief, the argument is that paper-book libraries made economic sense because libraries owned books like anyone else, but could efficiently organize them to be lent out many times.

This “First Sale Doctrine” falls before the licensed-usage model of contemporary ebooks. It’s not in publishers’ or writers’ interests to allow libraries to buy an item once at a consumer or near-consumer price and lend it out to many people, even serially, forever. Libraries will be forced to pay something closer to the true value of their lending activity, which will cost much more. It will convert libraries from an almost magical value multiplier, into a “simple” book subsidy.

Why are they dead? Ebooks kill small community libraries for the same basic reason—ebooks are and will remain a licensed good, not a freely owned one. The smallest libraries rely on the rights implicit in physical ownership. eBooks change—take back—many of those rights.

This boils down a little differently:

Small libraries depend to a large degree on cast-offs and donations. But consumers can’t give their ebooks to anyone when they’re done with them. They’re technically and/or legally locked to a device or personal account.

Small collections grow organically and lazily without a “librarian.” It’s unlikely they will be able to negotiate and organize whatever “institutional subscriptions” will be available for public libraries.

If community libraries often can’t pay for new paper books, it’s unlikely they will have the funds to engage in high-priced site- or multi-use licensing of books.

Public libraries have market power. Even if they can’t preserve first-sale value, they can use their collective and even individual scale to negotiate deals. Small community libraries are too fragmented and casual for market power.

Public libraries are connected to real moral and political power, and it pays dividends. For example, although public libraries weren’t even involved in the infamous Google deal, the parties thought it politic to grant public libraries free access to copyrighted books at one terminal per building. This power may come in handy if publishers put the squeeze on them, but the smallest community have neither market or political power.

Counter-arguments. The argument could be made that ebooks will eventually revert to a more traditional “ownership” model. But why? Consumers have already made it clear that they will trade convenience and price to give up traditional rights of resale, lending, donation and inheritance. There has been no large-scale clamor for such rights, and I don’t see one emerging. Rather, as ebooks advance, the personal, non-transferable nature of the medium will become increasingly accepted.

It has also been suggested that, although ebook DRM and contracts will stiffle lending, rampant piracy can function as a sort of rough substitute. If ebook piracy reaches music-piracy levels, this may come about–together with a sharp decline in quality writing which, unlike music, can’t fall back on concert tickets and t-shirts to make ends meet. But either way, small communities will not be involved. Private citizens may trade ebooks, but a church or a senior center will not put its legal neck on the line to engage in a secondary activity like book lending.

What will we lose? At lot more than you might think, particularly if you’re healthy, young and not much of a joiner. But here’s a partial inventory of some the small lending libraries within a mile of two of my home:

A dozen churches, some with significant libraries

Two synagogues

A muslim community center

A natural birthing and parenting center

An Irish heritage center

A handful of exclusive private clubs

A Masonic temple

An arts and theatre center

A welter of general health centers

A cancer center

A center for grieving children

A hospice

A homeless shelter

A left-wing political action center

An advocacy group for Maine children

A center for transgender youth

A fiber-arts group

An Audubon Society

The YMCA

Semi-ornamental collections in a legion of coffee shops, hotels, restaurants, bars and so forth

Two “Bookcrossing zones,” where strangers leave and grab used books

A tiny, poor, seldom-open private library that’s been around since 1815 but mostly stocks recent bestsellers

Gloom and Doom? There is another side, of course. We shouldn’t forget that ebooks may well turn out to be an overall boon. Convenience, universal selection and writer-reader disintermediation are powerful, largely positive forces.

It may also turn out that, all things being equal, the “ownership premium”—the extra that books cost because they could be transferred to others—was an unnecessary drag on our lives. If we aren’t paying for true ownership, we can perhaps rent—and read—more. Maybe with books, as with tuxedos, most people are better off renting.(1) Or, to take another example, where we once dug wells, and “owned our own water supply,” we eventually found it was more efficient to socialize the cost of the infrastructure, and pay for usage.

I even expect we don’t even know all the good things ebooks will bring about. I’m not even being sarcastic.

But if something is gained, something will definitely be lost. The list of ebook “externalities” is long: the death of physical bookstores, the wounding or death of traditional public libraries, the concentration of retail power in a few hands, surrendering your reading history to corporations, privacy and censorship issues in undemocratic states, leaving your books to your kids, lending books to friends, showing off, subway voyeurism, etc.

So, to that list, add the death of the smallest libraries.

1. I own my own tuxedo, however, and I wear it whenever I can, dammit.

Thursday, March 25th, 2010

PLA is happening right now in Portland, OR. We don’t have our own booth, but Casey is hanging out at the ProQuest booth (booth 2032), along with the Bowker folks. Stop by to talk about LibraryThing for Libraries, and to see live demos of Library Anywhere—a mobile catalog for any library!